Kevin O'Toole/LONDON
Privatisation plans for Pakistan International Airlines (PIA)have been put on hold, says the carrier's new chairman Shahid Khaqan Abbasi, but he confirms that decisions are close on new-aircraft purchases which will mean that the entire fleet will be renewed over the next few years.
"PIA is no longer a priority for privatisation," says Abbasi. The chairman took up the reins at PIA in May, is a long-standing member of the Pakistani parliament and is an advisor to the country's recently elected prime minister. He says that the more pressing need is to push through improvements in the airline's lacklustre levels of efficiency and service.
The previous Government had appeared ready to sell off part of its 58%stake, outlining plans for an airline equity partner, to be followed eventually by a flotation. That is no longer an immediate prospect, although Abbasi says that a financial advisor will be appointed to help with the refinancing and restructuring effort. Abbasi has set an ambitious target of cutting the airline's high fixed costs by 20%within six months, including plans for extensive outsourcing and the sale of non-core businesses, which range from hotels to hospitals. The hotels alone could fetch $200 million he says, adding that the process will start this year.
Any reductions in the workforce will take place through natural attrition of the workforce which is now running at around 600-800 staff a year, he says. The group's results for the latest financial year to June 1997 have yet to be released, but Abbasi says that the profit will be "close" to the budget of Rp400-550 million ($10-14 million). The current year will be one of consolidation, he adds.
Meanwhile, the airline is preparing to make a start on what will amount to a complete overhaul of its aircraft fleet. The first decision centres on a replacement for six ageing Boeing 747-200s. The choice is due to be made by the end of August or start of September. The Boeing 777-200IGW and Airbus A340-300 are the main contenders, although Abbasi says that some 747-400s could be included in the order, depending on cost and the need for frequency versus aircraft capacity increases. The final order will be between six and eight aircraft, depending on this decision.
Two production slots each have been reserved with Airbus and Boeing pending a final decision to ensure that deliveries can begin in late 1998, says Abbasi. He adds that financing will be raised "purely commercially".
The choice of the larger aircraft will also influence the decision over a replacement for ten Airbus A300s, due to emerge within the next couple of years, with Airbus and Boeing in contention, offering the A330 and 777. Abbasi says that PIA intends to start a "long-term commitment" to one of the manufacturers which could eventually also include narrowbody aircraft.
A final part of the fleet renewal will come with the retirement of PIA's fleet of 13 Fokker F27s, which have an average age of 34 years and are becoming expensive to maintain. Talks are taking place with Bombardier and Aero International (Regional)for the Dash 8 or ATR 72, for an order for eight to ten aircraft. These will be phased in gradually, says Abbasi.
Source: Flight International
